THE PRESS TUESDAY, JANUARY 31, 1984. Labour and the Treasury

Press, 31 January 1984, Page 18

THE PRESS TUESDAY, JANUARY 31, 1984. Labour and the Treasury

Members of a government in a democracy must necessarily wear two hats. They are members of a political party that seeks to score and maintain advantages over contending parties, and as such they and their decisions are fair game for criticism by other parties. Senior members of the ruling party are also expected to govern, to the best of their ability, on behalf of all citizens. To the extent that Sir Robert Muldoon is a member of the National Party, it may seem unfair to the Labour Opposition that he is provided with confidential estimates of State expenditure and revenue for several years ahead by the Treasury. As Minister of Finance, he is entitled to such estimates from his advisers; and he is required, in the interests of the whole community, not to make known information that might give unfair advantages to some sections of the community.

The Labour member of Parliament for Miramar, Mr Peter Neilson, appears to have overlooked, or to have brushed aside, the implications of information in the Treasury forecasts that he has attempted to obtain under the provisions of the Official Secrets Act. Forecasts of State revenue, expenditure, and deficits, cannot be known accurately until a Budget is worked out in detail. The forecasts for 1984-85 will not be completed for at least another four months. They will become public knowledge on Budget night. Until then, any forecasts can be no more than a set of studies that show the likely outcome of the country’s finances if certain assumptions are made, or if certain decisions are made by the Government. Among the reasons given for its refusal to supply the information to Mr Neilson, the Treasury has said that assumptions about the country’s economic performance must take into account the future levels of wages. These are still matters for delicate negotiations. Members of the Government may have good political reasons for not wanting their opponents to know what levels of wage increases are contemplated, though it is virtually impossible for anyone to predict the level. More important, a Treasury guess would commonly be taken as Government policy; and misunderstandings here could gravely upset negotiations on wage-fixing. If Mr Neilson and his colleagues believe

that they need detailed forecasts of the country’s economic performance for the next three years before the Labour Party can present its policies for the next General Election, they have two courses. They can wait until after the Budget, when accurate figures for another year will be available. Or they can seek such estimates of Gross National Product as may be available, from the Treasury or from other economic forecasters, and make their own assumptions about the effects of different levels of expenditure, taxation, and deficit on the part of the State. Many Labour members may have forgotten, or may never have known, the constraints that a party in office must apply to the distribution of much of the advice it receives from its Public Service. If they have an opportunity to learn, they will quickly discover the kinds of reasons why many economic forecasts, made by the Treasury on behalf of the Minister of Finance of the day, need to be given in strict confidence. The Labour Party can, and no doubt will, make the most of its being in the dark about some forecasts. Even the Government is in the dark until Budget policy has been fixed and until wage-fixing negotiations have been settled. Giving the appearance of conscientious planning of an election policy is good campaigning. Protesting that the necessary information is not available may look like the writing of an escape clause in the manifesto. In fact, economists outside the Treasury can probably give estimates just as useful to the Labour Party or anyone else; but these, or any estimates, will not mean much until the assumptions have been replaced by taxation decisions, new wage rates, trade trends, any monetary policy changes, and decisions on Government spending. The question posed is rather like asking for the rate of inflation for two or three years ahead. No-one knows the answer. Before the Labour Party undertakes to supply such information in future, it should consider whether such information is either misleading to the public, as well as to politicians, or tantamount to a Budget leak that could be exploited — perhaps foolishly — in ways that would further confound the predictions.